4i) Suppose the Bank of Canada sells a member bank a $3,000 security, the desired reserve ratio is 20 percent, banks hold no excess reserves, and all loans are redeposited. How is the money supply affected?

a. The money supply increases by less than $15,000.

b. The money supply decreases by less than $15,000.

c. The money supply increases by $15,000.

d. The money supply decreases by $15,000.

4ii) If the reserve ratio is 10 percent and a bank receives a new deposit of $20, what happens to the bank's reserves in the longer term?

a. Reserves increase by $2.

b. Reserves increase by $18.

c. Reserves increase by $20.

d. Reserves increase by $200.

please explain thoroughly why the correct answer is correct